Mayor positive about a Land Value Tax trial

With the release of the London Finance Commission report due at the end of this week, Assembly Member Tom Copley AM reiterates his call for a Land Value Tax.

‘Tax Trial – A Land Value Tax for London?’[2], was published on behalf of the London Assembly PlanningCommittee.

The investigation examined how incentives could be provided to bring forward land more quickly for the development London needs to support its growing population and increasing housing demand.

The three main recommendations are for the Mayor to:

Assess the powers he would need to implement and operate a Land Value Tax (LVT) to replace the three basic property taxes: council tax, business rates and stamp duty land tax.

Commission an economic feasibility study that would model the implementation, operation and likely yield of a LVT in a geographically defined area of London – and if the commission decides on its feasibility;

Implement the LVT in a limited geographical area of London for testing, encouraging housing development and funding supporting infrastructure - such as in Old Oak Common.

The Mayor has now responded to the report [1].

The response embraces the report’s recommendations, but points out that at the moment the Mayor does not have the powers to implement them in full. Primary legislation and further devolution of fiscal powers may be required.

There are a number of ways the Mayor is, however, willing to take the recommendations of the report forward:

“The idea of a land value tax pilot is a good one” and the Mayor will try and take this idea further with the Treasury in the context of a number of other complex areas of tax devolution (including business rates).

The Mayor has re-established the London Finance Commission to consider the need for further devolution of fiscal powers to London and study the potential for land value taxation.

In its last Budget, the Government invited Transport for London (TfL) to carry out a technical study to assess the potential for land value uplift capture and TfL will discuss their work with the Planning Committee.

The Old Oak and Park Royal Development Corporation, a Mayoral Development Corporation, has indicated it would like to pilot some of the other recommendations in the Land Value Tax report.

Tom CopleyAM author of the report said:

A Land Value Tax would discourage land banking, where developers sit on land waiting for its value to rise without building on it. This would incentivise the building of news homes quickly while raising much needed funds for investment. It would not be an additional tax, but would replace existing property taxes like council tax, business rates and stamp duty.

Land Value Taxation has wide ranging support from across the political spectrum, from Winston Churchill to John McDonnell, and economists on the left and right.

With the London Finance Commission report due to be released this week, we encourage the Mayor to take the recommendations a step further by seeking the powers to trial a Land Value Tax in part of London.

As well as investigating issues that matter to Londoners, the London Assembly acts as a check and a balance on the Mayor.

For media enquiries, please contact Alison Bell on 020 7983 4228. For out of hours media enquiries, call 020 7983 4000 and ask for the London Assembly duty press officer. Non-media enquiries should be directed to the Public Liaison Unit on 020 7983 4100.